Wellington City Quarterly economic monitor - September 2018

Overview

Indicator Wellington City Wellington Region New Zealand
Annual average % change
Gross domestic product
2.3%
2.6%
2.9%
Traffic flow
2.9%
4.4%
3.9%
Residential consents
9.7%
13%
5.4%
Non-residential consents
-33%
-23%
4.9%
House prices*
11%
12%
8.4%
House sales
0.8%
-2.2%
-0.6%
Guest nights
2.3%
2.1%
2.7%
Retail trade
2.8%
4.7%
4.8%
Car registrations
-4.6%
0.8%
-1.7%
Commercial vehicle registrations
17%
8.3%
2.3%
Jobseeker Support recipients
2.0%
2.7%
2.2%
Tourism expenditure
6.2%
7.0%
8.2%
Level
Unemployment rate
4.1%
4.4%
4.3%
International net migration
2,495
3,269
62,735
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Wellington City

Wellington City’s economy continued to grow at slightly below the national average pace in September. According to Infometrics provisional estimates, annual GDP growth in Wellington City ran at 2.3%pa in September, compared to 2.9%pa growth seen for New Zealand.

Like most of the rest of the country, jobseeker numbers in Wellington City pushed a little bit upward in the September quarter. But unemployment rates continued to track downwards. Combined with ongoing population growth, these indicators reflect an expanding local economy where the base of people in work is increasing.

Retail spending in Wellington in September climbed 2.8% since the 12 months to September 2017. Despite relatively solid economic and employment growth, retail sales activity continued to grow at a lacklustre pace, especially compared to the national rate of 4.8%pa. Car sales also came off the boil in the 12 months to September, falling 4.6% from the previous year.

In contrast, businesses are expanding their fleets with commercial vehicle registrations up a whopping 17% from a year earlier.

But recent business confidence results show that firms are becoming reluctant to invest in longer-term expansion. Non-residential building consents in the 12 months to September reflect this reluctance, with consent values down 33% from a year earlier.

Over on the residential side, the Wellington property market is still looking particularly tight, with prices up 11% since the September quarter last year. Although houses in Wellington (relative to incomes) are more affordable than the national average, the gap has narrowed considerably since 2016. Nevertheless, more houses are coming on-line with residential consents up 9.7% from a year earlier – well above the national average of 5.4%.

Overview of national economy

We’ve revised up our forecasts of economic growth. It’s not a big change – our growth projection for the year to June 2019 has lifted from 2.7% to 2.9%. But it’s an upward revision and so is at odds with the air of despair being generated by negative business and consumer confidence surveys. Better economic growth in the near term is largely about government spending. Aside from government spending, the other major upward revision is the export outlook. Export prices are at their highest level since 2014 in NZ dollar terms.